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February 2002
[re] Making Muzak

      This summer, as you’re wading through the water park at the Siskey Family YMCA, don’t be surprised to find yourself singing along to the Beach Boys. Perhaps without realizing it, you’ll be going on a surfin’ safari — thanks to a wave of music provided by Muzak LLC,  based in nearby Fort Mill.
     That’s right: Muzak The company famous for “elevator music” and white-bread instrumental versions of rock-n-roll classics has established its corporate headquarters in the Charlotte area and, more remarkably, has become hip. More than 100 million people every day hear Muzak programming, whether in grocery stores, restaurants, shopping malls– and even their workout facilities.
     Muzak has “a good selection of music,” says Jerry McGuire, operations executive of the Siskey YMCA, in Southeast Charlotte. “Even more important than that, (the music) helps to create a very friendly environment.” Rather than walking through a big, echo-ing building, guests at the Y typically experience a combination of oldies and adult contemporary favorites, ranging from tunes by Elvis to the Beatles to Celine Dion. 
     These aren’t re-recorded sound-alikes, either; they’re original versions, by original artists. Muzak pays for the rights to use and rebroadcast the songs, which the company’s “audio architects” then arrange in a variable playlist that fits the individual atmosphere of each client’s business.
     At the Siskey Y, light rock is piped into the locker rooms, while more upbeat melodies motivate people in the fitness centers. Members also can tune their headphones to choose other Muzak selections, including country and Christian pop. By the pool, it’s the Drifters and other beach-style music. 

Music into Muzak

     Such a diverse selection is light-years away from Muzak’s beginnings in the 1920s as a musical means to relax workers and improve their production. General George Squier patented the process of transmitting music over electrical lines, and called his company “Muzak” – a combination of “music” and “Kodak,” his favorite high-tech company. He soon saw a need for Muzak in buildings that used a new contraption called an elevator. Workers often were uneasy about riding this so-called elevator; Muzak helped calm their nerves.
     Muzak gained momentum over the years as employers found that workplace music improved workplace morale, resulting in greater productivity and attendance. By the mid-1980s, satellite technology further increased Muzak’s reach.
     In 1997, Muzak underwent a corporate and philosophical transformation. The company’s old-guard executives until then had tended to rely on scientific research to support the need for background music.
    “It wasn’t that they didn’t know what they were doing,” explains Bill Boyd, Muzak’s CEO. “That (type of music) is what it was supposed to be.”
     Anticipating the future of music and its potential, however, a newly installed management team forced Muzak to reconsider its purpose.
     “Now,” says Kenny Kahn, the company’s vice president of marketing, “we’re capturing the emotional power of music and putting it to work for businesses.” Account executives meet with clients to determine how each business views itself. Then, Muzak’s “audio architects,” under the guidance of Muzak-al guru Alvin Collis, create musical experiences that subtly reinforce the business’ image. A traditional clothing store may want clean-cut pop music in the background; a trendy clothier may seek something more “grunge”-esque.
    “That’s the coolest gig in the world,” says Kahn, referring to the men and women who listen to music all day long, then combine it to help establish the feelings customers get when they think about each individual business. At the same time, these audio architects are helping to redefine the way the world thinks about Muzak itself. 
      “It’s a fascinating business to be a part of,” Kahn continues. “In the past four or five years, Muzak has really come into its own, becoming known as our (its) brand of unique products…. As soon as we started to identify who we really are, we started to have more fun. And as soon as we started to have more fun, we started to make more money.” 

Muzak, Money and Momentum

     A portfolio company of ABRY Broadcast Partners III, Muzak boasts annual revenues of $225 million, from contracts that automatically renew each year. Boyd says the company is still a “peanut,” but adds that it’s a lot larger than it once was – and is growing steadily. Although new clients are “not beating a path to our door,” he says, “once we convince them that Muzak can work for them, they absolutely trust us.” After installing Muzak, says Boyd, “they never call us to tell us we made a (music programming) mistake. Never.”
      Reflecting that trust, the average client has stayed with Muzak for 17 years.
       “It’s a great business model,” Boyd continues. “We’re getting a regular check once a month, for 17 years – that’s good business.”
      Muzak is structured somewhat like a television network. Corporate headquarters, audio architects, technical operations and satellite uplink facilities are located in one place – the Lakemont Business Park, just across from Paramount’s Carowinds. Some 200 affiliate field offices worldwide – owned by Muzak in larger U.S. cities such as Boston, Charlotte, Atlanta, Seattle and Chicago; or independent franchisees – service clients within their regions.
       Franchises range in size from a small city to a region covering parts of several states, and typically make $100,000 in billings each month. These affiliates pay royalties to Muzak for providing programming; they then sell the Muzak concept and install it in local businesses, as well as local offices of national retailers. Muzak has more than 400 clients with nationwide presences, including Gap clothiers, McDonald’s restaurants and Red Lobster restaurants. Just these three retailers have nearly 20,000 locations, serviced by local Muzak field offices throughout the United States.
    “They play a huge role in satisfying the client,” Kahn says. 
     While large retailing clients such as KFC, Barnes & Noble, Crate & Barrel, Sears and JCPenney provide big-time Muzak airplay, it’s the local restaurants and retailers that compose most of Muzak’s sales – up to 75 percent. Here in Charlotte, Muzak clients include Bank of America’s Founder’s Hall, all Carmen!Carmen! Salon e Spa locations, the Siskey Y, and the Phillips Place shopping center.
    Another large segment of Muzak’s musical success is its Audio Marketing division, which provides “on-hold” and in-store sales messages to a client’s captive audience –whether shopping in the store, or calling for information. Muzak Voice clients can create and update their message scripts with their personal account coordinators or online. Then, professional voice talents, categorized as “Upbeat Friendly,” “Mellow Smooth,” “Mature Professional” and “Young Professional,” record the client’s voice tracks, which are delivered via satellite to the client’s audio system.
    According to Boyd, Muzak Messaging brings in about 20 percent of Muzak’s total revenue, some $40 million last year, and is growing at the rate of fifty percent each year. 

A Major Move

     From speakers in the parking lot of Muzak’s headquarters, the Beatles insist they’re traveling on the “One After 909.” Move over once, move over twice … and a visitor enters the building, to a reception area that’s anything but cold as ice.
      Although the warehouse-type space is simple, with poured concrete floors and exposed-ductwork ceilings, it doesn’t seem sterile. That’s due partly to the spirited activity of the headquarters’ 275 employees, who chat animatedly as they walk from one area to another, and partly to the music—of course—that rings in the air. After the Beatles, the Eagles sing their paean to James Dean, and then Jethro Tull invites guests to bungle in the jungle. The music list, posted weekly, changes format from day to day. One day it might be oldies, another day it might be new country. Hardly a stuffy corporate atmosphere.
      “When you walked in, you knew you weren’t at an ‘elevator music’ company, didn’t you?,” Boyd grins as he gives a quick tour of the 100,000 square-foot space. Mirroring the company’s logo — a stylized lower-case “m” surrounded by a circle — the circular lobby serves as a “city center,” from which a half-dozen cement “roads” branch toward workspace cubicles, audio booths and conference rooms bounded by walls of corrugated metal or heavy-duty plastic.
    No one here has an office: the president, controller and corporate counsel have modern, open cube-style workspaces, just like the support staffers do. Audio speakers in the ceiling provide “noise masking” to keep conversations private. Furniture accents are brightly colored in orange, lime and purple; walls are silver-toned metal with tiny circular perforations. 
     Boyd says the company spent about $1 million on workstations, and the cost of the building’s upfit was included in the 15-year lease. He emphasizes that the simple design –a tilt-wall construction warehouse – was chosen for its cost-effectiveness. The unique, cutting-edge design, however, is getting national attention; a group of architects from across the country is scheduled to tour the building this spring.
     Muzak moved its headquarters from Seattle to Fort mill in the autumn of 1999. The lease on its Seattle building was ending, and the company realized that costs associated with transporting franchisees and sales associates to meetings in Seattle were simply too high. A relocation firm was asked to find a suitable city, one with a mild climate and a versatile airport, for new headquarters. Fort Mill’s warm welcome enticed Muzak to the Carolinas, over cities such as Orlando, Baltimore, Louisville and Atlanta.
      Boyd — no relation to Charlotte broadcasting legend Ty Boyd — once owned the Charlotte-area Muzak franchise but sold it five years ago when he was asked to join Muzak’s board of directors, and then its executive team. The new team, aimed at re-branding Muzak with a contemporary image, knew exactly what it was doing, Boyd says. “I was there to help, since I had the Muzak background, but it was like: step aside and watch them run.” 

Muzak in Motion

    How fast is the company changing? Once upon a time, Boyd says — in June of 1997 — a company inquired about buying Muzak. Muzak’s asking price was $100 million. The firm declined. Fourteen months later, holding company ABRY Broadcast Partners III bought Muzak for $250 million.
     The company now is worth $750 million, “and they wouldn’t sell it for less than $1 billion,” Boyd says.
     Even more telling, Boyd adds, is Muzak’s work atmosphere. Five years ago, the company felt like a law office, he says; everyone wore suits and acted very serious. “They didn’t even have music playing in the office!” he exclaims. These days, Impromptu, open-floor meetings are the norm. The air may be filled with the sounds of Steely Dan or Led Zeppelin. New ideas are encouraged. Executives — most in their late 30s — have decreed that every day is Casual Day. 
     “We’re real comfortable bantering, arguing, discussing, having different opinions,” Boyd says. “It’s good for everyone; people know that they’re involved. We had this one meeting with the COO, where people were openly arguing before coming to a happy resolution. Afterward, the COO came up to me and said, ‘that was a lot of fun, wasn’t it?’”
      Boyd says he wants fun to be a large part of Muzak. Employees are encouraged to do their jobs well, but also to make time for life priorities, such as family or outdoor activities. Perhaps that’s why the new breed of Muzak-makers now competes for Muzak jobs, whereas the company once had to actively recruit employees.
     Generally creative types, Muzak employees have vastly different interests, Kahn says; their unifying affinity is their love of music. “Some of them are D.J.’s, some play in bands, others sing in their choir. I just happen to be a music fan with a huge CD collection.”
     Kahn’s home collection couldn’t possibly rival the company’s: Muzak’s library of seven million songs fills case after case, reaching seven feet high. At any given moment, there are a million songs on its server, ready to be sent via satellite to clients whose individual company images are best reinforced through kids songs … or Broadway favorites … or jazz instrumentals.
     Or, in the case of the Siskey Family YMCA pool, through feel-good beach music.
     “People associate that (type of music) with summer,” Jerry McGuire explains. “They may not even say they hear it, but they do. I see them tapping their feet.” 

Muzak’s Heart and Soul

     February marks a month of music and magic, as the Muzak Heart & Soul Foundation holds its Celebrity Music Auction at the Charlotte Convention Center at 6:30pm, February 6. The Foundation, established in 1998, is a public charity committed to expanding and redefining the scope of music education. Its funds support music education programs and students across the country, encouraging students to take their passion for music and apply that energy in all academic disciplines. 
     Some of the items up for auction include guitars autographed by Faith Hill, B.B. King and Dave Matthews; sheet music signed by Billy Joel; an album signed by Jim Morrison and the Doors,; a signed poster of Britney Spears; Clay Walker’s cowboy hat; a mint condition, never played “Meet the Supremes” album, by the Supremes; and a cancelled check marked “insufficient funds,” signed by actress/singer Courtney Love.
     In addition to music-related items, the auction also will feature several copies of “Long May She Wave, A Graphic History of the American Flag,” Kit Hinrichs’s book of American flag art and patriotic memorabilia autographed by former New York Mayor Rudy Giuliani, Martha Stewart, CNN host Larry King, and Gen. Norman Schwarzkopf, among others.
     Organizers hope to raise $250,000.
     Since 1998, the Heart & Soul Foundation has provided significant and focused support to music programs in more than 75 schools nationwide. For more information about the Muzak Heart & Soul Foundation and the Celebrity Music Auction, contact Muzak at (803)396-3093.

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